Whichever way next week's snap election swings, Telford Homes (TEF) chief executive Jon Di-Stefano is agnostic about the impact on his company. "I very much doubt anyone will put things in the way of building more homes in London," he says, pointing to just one of the numerous tailwinds buoying the housebuilder.
Of these trends, the most strategically significant is the growing institutional investor appetite for build-to-rent residential property schemes. This remains an under-served market, but Telford's strengthening presence in the sector is now represented by a contracted pipeline just shy of 500 homes with a combined value of £230m. Demand from a cluster of large-scale investors, together with traditional private sales, means the development pipeline now stands at £1.5bn.
A greater proportion of build-to-rent work has inevitably dented profit margins, but the pay-off is less time spent with bankers and healthier working capital. Regardless, earnings still came slightly ahead of analyst expectations, while the huge pipeline and swelling forward sales mean pre-tax profits should now exceed £40m in the current financial year, and £50m in 2019.
Taking that into account, analysts at Peel Hunt expect adjusted pre-tax profits of £44m and EPS of 47.1p for the current year to March 2018, up from £34.1m and 36.6p in 2017.
TELFORD HOMES (TEF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 435p | MARKET VALUE: | £328m | |
| TOUCH: | 435-438p | 12-MONTH HIGH: | 440p | LOW: 255p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 271p | NET DEBT: | 7% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 142 | 9.0 | 14.3 | 4.8 |
| 2014 | 141 | 19.2 | 26.4 | 8.8 |
| 2015 | 173 | 25.1 | 33.2 | 11.1 |
| 2016 | 246 | 32.2 | 39.3 | 14.2 |
| 2017 | 292 | 34.1 | 36.8 | 15.7 |
| % change | +19 | +6 | -6 | +11 |
Ex-div: 15 Jun Payment: 14 Jul | ||||
